TY - JOUR
AU1 - Wardhani, Nurhastuty
AU2 - Faff, Robert
AU3 - Liu, Lewis
AB - This study aims to investigate the factors influencing liquidity creation in banks, particularly focusing on the role of bank governance. Using a unique panel data set, it compares Islamic and conventional banks to discern governance’s impact on liquidity creation, offering insights for policymakers and bank managers.Design/methodology/approachQuantitative analysis is used on a panel data set to assess liquidity creation determinants in banks. A governance index is constructed, analyzing metrics such as risk management, audit committee effectiveness and Shariah board presence. Regression models identify significant relationships between governance factors and liquidity creation.FindingsThis study reveals a positive relationship between governance index and liquidity creation, especially in banks with better performance, higher credit risk, smaller size and lower equity, particularly in low-inflation environments. Specific governance practices significantly impact liquidity creation, alongside a positive relationship with Tier1 ratio, supporting the risk absorption hypothesis.Originality/valueThis research offers empirical evidence on the relationship between bank governance and liquidity creation, highlighting its significance for both Islamic and conventional banks. It provides valuable insights for policymakers and bank managers aiming to enhance banking sector stability and efficiency.
TI - Corporate governance and liquidity creation in a duality banking system
JF - Journal of Financial Regulation and Compliance
DO - 10.1108/jfrc-08-2024-0162
DA - 2025-03-31
UR - https://www.deepdyve.com/lp/emerald-publishing/corporate-governance-and-liquidity-creation-in-a-duality-banking-5LQ0qDli6C
SP - 214
EP - 243
VL - 33
IS - 2
DP - DeepDyve
ER -